Posted on: Saturday, November 27, 2004

Creditors go after 10 United planes

By Lynne Marek
Bloomberg News Service

CHICAGO — United Airlines Inc., under Chapter 11 bankruptcy protection since 2002, called an emergency hearing yesterday in Chicago to stop a group of creditors from repossessing 10 of its planes.

The UAL Corp. carrier asked U.S. Bankruptcy Judge Eugene Wedoff for a temporary restraining order, United spokeswoman Jean Medina said outside the courtroom. The creditors are seeking to take four Boeing 767s and six Boeing 737s, according to a document sent to UAL attorneys and its creditors' committee.

United has been working with the creditors for almost two years to reach new lease agreements that could help the company reduce costs. The group also controls about 165 additional United planes, equal to about one-third of the airline's fleet.

"Taking 10 aircraft out, unexpectedly, disrupts your schedule," said Bill Rochelle, a lawyer for aircraft creditors that aren't involved in today's hearing. "That well could result in some canceled flights."

Medina said she didn't know which routes the planes fly.

The creditors hold United leases and bonds that are backed by the 175 planes. A prior agreement reached by the creditors and United was dropped after a government board rejected a United loan guarantee request and the company determined it would need to further cut costs.

"We believe the financial issues involved can be addressed through constructive negotiation," Medina said. "We think it's an attempt to have us pay above market rates for the planes."